VPU, or value per user, is a poplar metric for understanding valuations on social networking sites such as Facebook, and can be compared to more standard metrics such as average revenue per user (ARPU).

Q. So this is a common way of valuing early stage social networking platforms, right?
A. Yes, although once business models kick in, we like to use ARPU. But Value Per User is a known and common metric. Of course, FB begs the question, especially since they’re providing such easy math: 1bn users, $100 bn market cap. So: $100 per user.

Q. And how does that number compare to other social networking sites?
A. As you might guess, its much, much higher. I think second place goes to Linked In, at about half that number. Zynga is below that, maybe $40 per. Skype was down at a measly $12 when it was sold.

Q. And in the case of FB, how does the VPU compare the ARPU?
A. Well, that’s where you get some really interesting numbers. Depending on who’s counting and exactly how, you’re maybe at $4 RPU for FB. So it would have to generate multiples of that number to get to a revenue run rate that would justify its VPN right now.

Q. Can it do that?
A. Well, about the best monetizer in the space is Google, at about $7 per user. Other social networking sites are less, and FB actually makes more per user than many of them, including Twitter. But what that shows you is how hard its going to be for FB to increase its RPU enough to come into any sort of rational relationship with its VPU.

Q. Well, another way it could earn its over all valuation, though, would be to increase its total users, right?
A. Yes, of course. But its growth is more outside North America now. Because of our developed ad and ecommerce systems here, NA users are more valuable than non NA users. So although growth continues, the users who are being added deliver less RPU… which just increases the mystery of FB’s VPU.